news-record.com

Staving off foreclosure benefits more than the beleaguered property owner. Neighborhoods and lenders also are much better off.

But stemming the tidal wave of mortgage defaults following the real estate boom and subsequent crash has been a challenge.

People unable to make ballooning payments increasingly face eviction. As a result, lenders end up with properties they may have difficulty reselling.

The N.C. Office of the Commissioner of Banks proposes several regulations designed to ease the crunch.

First, the foreclosure process would stop once the property owner asks for a loan modification. And the lender would have to respond promptly when homeowners seek mortgage assistance. If they qualify for reverse-loan terms, notification must be made.

Communication, mediation and counseling clearly are the priorities in stabilizing neighborhoods and propping up falling property values.

Unfortunately, not all lenders would be covered. Only brokers and lenders that aren't state banks or savings and loans would have to comply. The state doesn't oversee large, federally chartered banks.

However, the impact still will be significant because an estimated 75 percent of home loans in the state were made by mortgage brokers who now would be covered.

While encouraging federal regulators to act more forcefully is worthy, first initiating reform at the state level will calm a troubled marketplace.

Too often, homeowners -- many for the first time -- simply are walking away if payments remain high and values slip. Adjusting mortgages to better reflect changing property values helps them as well as lenders who, otherwise, would be left holding the bag.

The issue isn't whether homeowners knowingly got in too deep or were misled by shady lenders. What counts now is making the best of a bad situation.